As Jive Continues To Plummet, Is A Takeover In The Cards?

Once upon a time,
Jive, the vendor of enterprise collaboration software, was regarded as the player to beat. It seems like only yesterday that I was attending enterprise software conferences where Jive was held up as the future of enterprise communication and collaboration. Fast-forward to today and Jive is something of a dinosaur - it delivers a monolithic, and inflexible solution that is being undermined by fast-growing, and far more user-centric solutions suck as Slack,
Yammer
and HipChat.

Jive is, of course, a publicly listed company and made a real splash when it IPO'd. Being listed means it is under close scrutiny and the markets have not treated Jive well. From its peak of a market capitalization of $1.7 billion in April 2012, the company has declined to a market cap of $400 million and shows no signs of improving anytime soon. The market can handle high-growth but unprofitable companies like Box and
Zendesk, but when both customer and revenue growth slow, the markets quickly move to punish vendors.

So where market performance falls, acquisition interest increases as potential suitors look to the chance of making a quick buck. A recent
report
by analyst firm RealStory looked at the chances of a Jive takeover. RealStory looked at both Jive in isolation (what does Jive's tanking mean for current, and future, Jive customers) and the market in general (is Jive the "canary in the coalmine" that indicates a systemic problem in the enterprise collaboration software market?).

The report not only looks at the market implications, but takes a look at potential suitors for Jive. RealStory applied its Suitorbility analysis to come up with a quadrant assessing motivation to acquire with the likely impact on customers. The bottom line being that RealStory believes
OpenText
or Oracle are the most attracted to Jive while customers would do best from a Tibco or SAP
deal. It's a perfect example of a disconnect between vendor M&A appetite and what is the right thing for the customers. RealStory notes that existing Jive customers are largely satisfied with the product, and a takeover wouldn't serve their needs well.

On to the findings of the report. RealStor sees two possible directions for Jive: firstly that it will dramatically reduce expenses in order to become a profit-orientated "value" play in equity markets or secondly that it will be acquired. More broadly though, RealStory reflects upon the fact that enterprises looking to avoid or complement
SharePoint
in this marketplace still face a highly fragmented set of alternatives, and should prepare to pursue multi-vendor strategies. RealStory notes that:

“

Concurrently, enterprise demand for “complements” to SharePoint is unlikely to abate, especially as Microsoft narrows SharePoint’s remit in the cloud. Moreover, Yammer is not a plausible alternative to Jive; Yammer is more of a single feature (activity stream) than a sort of elaborated social application — applications on which Jive’s customers depend. The challenge here for Jive is that its rich set of services probably appeals to a finite set of (very large) customers whose tolerance for continual upselling is limited. Therefore this scenario seems less plausible, even if the company succeeds at reducing its cost base aggressively.

It's hard not to look at Jive as an example of an IPO occurring far before the necessity or viability of a product class has been determined. Jive was the poster-child for a movement that has largely been subsumed into far more fundamental shifts - Jive took enterprises a small step in the direction they needed to go. Today the demands are for platforms that deliver paradigm change. Jive might just be a casualty of that market movement.